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Steelcase's 4th Qtr Loss far exceeds expectations

Tuesday 31 March 2009

At the end of a rough year marked by rounds of job cuts and belt-tightening, Steelcase Inc. posted a fourth-quarter loss of $65.7 million Tuesday, with sales off 27.3 percent to $654.9 million.

The world\'s largest office furniture company said restructuring costs came to $11 million in the quarter ended Feb. 27, and a noncash charge of $50 million added to the net loss. Excluding those two amounts results in an adjusted loss of about $4.7 million.

For the year, analysts expected earnings of 60 cents per share. Steelcase missed that forecast, too, posting a 9 cent loss per share, or $11.7 million lost in 2009.

Sales were $3.18 billion, down from $3.42 billion in 2008.

\"Fiscal 2009 was a year of tremendous volatility,\" CEO Jim Hackett said. \"Uncertainty prevailed early in the year and in the second half, the full impact of the economic weakness affected industry demand.\"

Last month, the company hit its North American work force with salary cuts of 5 percent or more and said it would end up to 900 jobs, both hourly and white-collar, in a bid to save as much as $30 million a year.

It will also drop its matching contribution to employee retirement plans starting next month, and board members have reduced their annual compensation.

In its third quarter, Steelcase said its profit dropped 99 percent, driven by slowing sales and higher costs to restructure.

Across the industry, shipments this year are forecast to be off more than 19 percent while orders for office furniture are expected to drop by 26.5 percent, according to revised estimates in January from the Business and Institutional Furniture Manufacturers Association.

Steep drops in white-collar employment in the U.S., rising office vacancy rates, and a chill in commercial construction are creating a rugged market for the nation\'s office furniture industry.

The company employs 13,500 worldwide.

The stock has traded in a 52-week range of $4.24 to $16.09. It hit its 52-week low the day third quarter results were released.

Steelcase is discussing the results with analysts at 11 a.m. today in a webcast that will be replayed.

Steelcase stock closed Monday at $5.06, down 54 cents, on the New York Stock Exchange.